24/7 Wall St.

Needless to say, investors that were battered by the fourth-quarter sell-off have felt better recently, as we have entered the new year and a new quarter and the market has finally turned around some. With the potential for solid fourth-quarter earnings, what seems like a more dovish tone from the leader of the Federal Reserve, and a possible breakthrough on trade with China, we are finally seeing some green across our screens after a sea of red.

One good thing about brutal sell-offs is the market often realigns with much better valuations, and good stocks become great stocks to buy because they are much cheaper valuation-wise, and those with big prospects for growth become steals for investors with dry powder.

In a new research report, Jefferies screened its research universe for stocks with lower valuations and better growth potential. The report said this:

With future growth less certain, there’s a desire for stocks with company specific revenue drivers, the issue is that many of these same companies still carry high multiples and the highest growth stocks are well known. We looked for Buy-and Hold-rated companies with above-average forward revenue growth, below-average forward multiples, flat to up revisions and net debt to cap of 60% or less.

At 24/7 Wall St., we reviewed the stocks they picked looking for those that only had Buy ratings. These four look like great picks for the new year.

Broadcom

This stock has been crushed and is a top value play at Jefferies. Broadcom Inc. (NASDAQ: AVGO) has an extensive semiconductor product portfolio that addresses applications within the wired infrastructure, wireless communications, enterprise storage and industrial end markets.

Applications for Broadcom’s products in its end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems and displays.

Top Wall Street analysts like the leadership in the mobile, data center and broadband markets, and especially in the radio frequency (RF) arena. Many on Wall Street see a cyclical rebound in industrial and communications demand, and Jefferies said this:

After being one of the best-performing stocks over the previous three years, Broadcom declined by 22% peak-to-trough in 2018, as its blocked bid for QUALCOMM and recent acquisition of CA technologies caused uncertainty about the company’s strategic direction. The analyst likes the CA acquisition and believes the software capability will give the company the opportunity to sell chips and software directly to Fortune 500 companies, and position them as more strategic suppliers.

Broadcom investors receive a 4.45% dividend. Jefferies has a $314 price target on the shares, while the Wall Street consensus target is $291.41. The shares closed trading on Monday at $237.98.

Cigna

This is a solid value buy in the health care sector. Cigna Corp. (NYSE: CI) is a major health services organization that provides insurance and related products and services in the United States and internationally. All products and services are provided exclusively by or through operating subsidiaries of Cigna, including Cigna Health and Life Insurance Company, Life Insurance Company of North America, Cigna Life Insurance Company of Canada and their affiliates.

The health care giant offers an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits and other related products, including group life, accident and disability insurance. Cigna maintains sales capability in 30 countries and jurisdictions, and it has approximately 86 million customer relationships throughout the world.

The analyst said this about the company:

Stand-alone Cigna’s out performance has led to a 12% increase in guidance year-to-date. In addition, estimates for 2019 and beyond still reflect stand-alone, but should increase when the Express Scripts deal closes. Management has targeted mid-teens accretion in year one. Cigna is the cheapest managed care organization, despite this performance, because of concerns about threats to the pharmacy benefit manager business model.

The Jefferies price target is $244, and the consensus target is at $247.21. The shares closed at $186.50 on Monday.

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Raytheon

This company has a diversified mix of business and remains a defense favorite at Jefferies. Raytheon Co. (NYSE: RTN) is an industry leader in defense, government electronics, space, information technology and technical services. The company operates in four principal business segments: Integrated Defense Systems, Intelligence, Information and Services, Missile Systems, and Space and Airborne Systems.

Top Wall Street analysts feel that the company could be one of the biggest winners as the global threat environment has been heightened substantially this year, and with 31% of total sales from international, the prospects remain very positive. Many cite the Patriot Missile deal signed with Poland as a good example, which could propel 2018 and beyond earnings.

In addition, many think Raytheon has the balance sheet capacity to pre-fund its pension to take advantage of the currently higher tax deduction, which could eliminate or reduce mandatory pension funding and provide a lift to 2019 free cash flow and earnings. It is set up for continued strong orders from the wave of recent foreign military sales approvals and strong pipeline of large international missile defense projects.

The analyst said this about the defense giant:

Raytheon posted a framework for 2019 growth that underlines the value in the portfolio. Management expects revenues to grow 6-8% next year which is 1.5-points above the analysts initial expectations. In their view, the growth is supported by bookings activity and a strong backlog (up 9% year-to-date).

Shareholders receive a 2.23% dividend. The $240 Jefferies price objective is well above the $217.71 consensus figure. Shares were last seen at $155.36.

SLM

This company is the go-to financial institution for college loans. SLM Corp.’s (NYSE: SLM) primary business is to originate and service loans it makes to students and their families to finance the cost of their education. The company is a saving, planning and paying for college company.

SLM is engaged in originating and servicing Private Education Loans it makes to students and their families. It uses Private Education Loans to mean education loans to students or their families that are not made, insured or guaranteed by any state or federal government. The company also operates Upromise, a consumer savings network that provides financial rewards on everyday purchases to help families save for college.

The analyst loves the valuation here and said this:

SLM is the largest private student lender in the US. In this capacity, SLM controls nearly 50% of its primary market, and the analyst notes the student lending market is a secular (rather than cyclical) market as the demand for secondary (and graduate education) is persistent in any economic environment (and may increase in downturns).

Jefferies has set its price target at $16. The consensus target is $14.20, and shares closed at $8.94.

These four top companies dominate in their sectors and their stocks were absolutely eviscerated during the fourth-quarter market rout. While more suited for aggressive accounts, they look like great buys at current levels.